• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

National Debt Relief

National Debt Relief - A+ BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

Talk to a debt counselor toll free:

800-300-9550

Get Relief From Credit Card Debt

Medical Bills and Unsecured Loans

  • Services
    • Debt Settlement
    • Debt Relief Benefits
    • Qualifications
    • Is Debt Settlement Right For Me?
    • Debt Help By State
    • Debt Relief FAQs
      • How Debt Relief Affects Your Credit Score
    • Free Budget Planner Worksheets
    • Free Debt Calculator
  • Options
    • Debt Relief
    • Bankruptcy
    • Credit Card Debt Relief
    • Debt Consolidation
  • About Us
    • Who Is National Debt Relief?
    • Accreditations
    • Proven Results – Debt Settlement Letters
  • Contact Us
    • Apply Now
    • Contact Us
  • Client Login
  • Careers
  • Blog
HomeBlog BlogChapter 7 vs Chapter 13 Bankruptcies – What Is Your Best Option?
Video Transcript

Free Debt Relief Quote

  • National Debt Relief, LLC BBB Business Review
  • McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

Chapter 7 vs Chapter 13 Bankruptcies – What Is Your Best Option?

January 31, 2013 by National Debt Relief

Are you really seriously in debt? Are you in arrears on your payments? Have you dug yourself into such a hole that you just can’t see ever getting out? In this case, you may be thinking about filing for bankruptcy.Gavel, pen and document titled Petition To File For Bankruptcy

The two types of bankruptcies

There are two types of bankruptcies available to individuals. They are Chapter 7 and Chapter 13 bankruptcies. A chapter 7 bankruptcy is often referred to as a liquidation bankruptcy, while a chapter 13 is more of a reorganization bankruptcy.

A chapter 7 bankruptcy

A chapter 7 is called a liquidation bankruptcy because its purpose is to liquidate your possessions so your creditors can be paid off. However, that’s in theory. In practice, so many assets are considered “exempt” that in most chapter 7 bankruptcies, nothing is liquidated. For example, you are allowed to keep the equity in your house up to a maximum amount (depending on the state in which you live) and ditto the equity in your automobile. You are also allowed to keep your personal possessions and furnishings and any tools used in your work. This means that for most people, everything they own is “exempt” and not subject to liquidation.

Debts that are discharged

A chapter 7 bankruptcy will discharge most if not all your unsecured debts. It will discharge any credit card debts, personal loans, lines of credit (if unsecured) and medical bills. It will not discharge student loan debts, child support or alimony, or any debts you incurred fraudulently. It will also not discharge past due taxes or any secured debts such as an auto loan.

A chapter 13 bankruptcy

A chapter 13 bankruptcy will not discharge any of your debts. Its purpose is to help you get your debts reorganized and to give you time to pay them off – usually three years. These are years during which your creditors cannot try to collect your previously incurred debts unless they go through bankruptcy court. The upside of a chapter 13 is that you would get to keep all of your assets. A chapter 13 will also stop any foreclosures.

Not everyone is eligible

If you think your best option would be a chapter 13 bankruptcy, you will need to demonstrate to the bankruptcy court that you would have sufficient income to meet your repayment obligations after certain allowed expenses are subtracted along with the payments you are required to make on your unsecured debts.

The impact on your credit score

Whether you file for a Chapter 7 or Chapter 13 bankruptcy your credit score will be negatively affected. I have read that declaring bankruptcy could reduce your credit score by 200 points. This means that if your score had been 740 before you filed for bankruptcy, it would now be 540. In addition, a bankruptcy will stay in your credit report for seven or 10 years, depending on the credit-reporting bureau. In the case of a chapter 13, this would most likely be seven years after you complete your repayment plan.

The good news

The negative effects of filing for bankruptcy will be lessened as time goes by and old accounts are removed from your report. Plus, if you continue to make your payments consistently, you’ll create a positive pattern that should help improve your credit rating.

A better alternative

A third option that’s chosen by many families is to let us settle their debts for them. While this will also impact your credit score, its effect will not be as severe as if you had filed for bankruptcy. Debt settlement can get your debts reduced substantially and help you become debt free in two to four years. Don’t file for bankruptcy until you’ve contacted us to learn more about debt settlement.

Do you qualify for debt consolidation?

National Debt Relief

National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

Follow National Debt Relief: Facebook Twitter Instagram Linkedin

Filed Under: Blog Tagged With: bankruptcy, bankruptcy options, file for bankruptcy

Primary Sidebar

Trusted By Our Clients

Excellent

Rated Five Stars Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

based on 24,642 REVIEWS

"Best decision I've ever made!"

They really care about "you" and making your life easier. They answer all of your questions and are very detailed.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Kolbie P.

"Saved me from drowning in the debt."

I was up to my eyeballs in debt and National Debt Relief saved me from drowning in the debt.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Joanna W.
Canal Winchester, OH

"Helped me settle my debts that were choking me."

National Debt Relief helped me settle my debts that were choking me.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Bobbie A.
Charlotte, MI

"Taken a big weight off of my shoulders."

National Debt Relief has taken a big weight off of my shoulders.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Richard D.
Piffard, NY

"Stopped all collection calls."

National Debt Relief stopped all collection calls and are working with my creditors to settle my debts.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Patricia G.
Oran, MO

"Now I can see a light at the end of the tunnel finally."

I was in a tough spot, financially and emotionally. Now I can see a light at the end of the tunnel finally.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Susan W.
Valparaiso, IN

"I'm sleeping better knowing they are helping me to eliminate my debt."

I'm sleeping better knowing National Debt Relief is helping me to eliminate my debt.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Jodi W.
Springfield, OH
Trust Pilot Reviews

Free Debt Relief Quote

By submitting, you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls or text/SMS messages). Msg. and data rates apply. You are not required to opt in as a condition of purchase.

The sooner you call,
the sooner we can help:

800-300-9550

Search NDR Blog

Recent Posts

  • Free Holiday Shopping Budget Template To Keep You Out Of Debt
  • How To Host Thanksgiving Dinner On A Budget
  • Tips For Finding Good Last Minute Travel Deals
  • How To Spend Less Money For The Holidays
  • Take Note And Save Money While Holiday Gift Shopping
  • How To Scare Up Some Extra Cash To Pay Down Your Debt [Slideshare]
  • 10 Ways To Rock The Gratitude Challenge This Thanksgiving
  • How To Write The Perfect Salary Negotiation Email
  • When Should You Start Saving Money For Your Kids
  • The Best Budgeting App For Your Family

 

FAQs about debt relief

AFCC disclosure

National Debt Relief, LLC BBB Business Review AFCC Top Ten Reviews Gold Top Consumer Reviews Consumers Advocate Trust Pilot
  • About Us
  • Contact Us
  • Privacy Policy
  • Terms Of Site
  • Disclaimer
  • Sitemap

© 2019, National Debt Relief, All Rights Reserved.